Should you go through a Mortgage Broker or a Bank for a Mortgage?
Another good question!
First of all, just to be clear on terms: if you’re looking for mortgage services, there is no difference between a mortgage broker and a mortgage agent (see my previous post).
So what’s the difference between getting a mortgage through a mortgage broker versus a bank?
A mortgage broker (or agent) belongs to a brokerage and has access to various lending institutions and their respective mortgage products. A bank, on the other hand, has mortgage specialists who represent them and they have access only to the bank’s own mortgage products.
For example, if a certain mortgage specialist works at Bank A, they can only offer you the mortgage products from Bank A.
Mortgage agents have more flexibility. They have access to many lenders. They may even have access to the mortgage products at Bank A.
If the mortgage agent thinks a mortgage at Bank A is best for you, they’ll get you that mortgage. If they find a better mortgage from a different lender, they’ll get you that mortgage instead.
A mortgage specialist is tied to the bank and doesn’t have the option of getting you a better product from a different lending institution.
What if you don’t Qualify for a Mortgage with a Bank?
Another difference is that if you don’t qualify for any of the mortgages at Bank A (even if it’s just a temporary situation), the mortgage specialist can’t get you a mortgage. The best the mortgage specialist can do at that point is recommend you see a mortgage agent.
If a mortgage agent finds that you don’t quite qualify for a mortgage at Bank A or any of the big banks, they can go to one of their other lenders to find something for you.
Sometimes it may temporarily come at the cost of a slightly higher mortgage rate than you hoped for, but the agent will get you a mortgage just to get you through that hump.
And that’s what’s important.
After some time, maybe even as little as a year, your situation might stabilize and you find you now qualify for a better rate.
At that point, the mortgage agent could move you to a mortgage with the better rate; a rate that you couldn’t qualify for previously. That new mortgage could be with a different lender altogether. But it could even be back with Bank A.
So which is Better? A Mortgage Broker or a Bank?
So, in the end, the biggest difference between a mortgage agent and a bank is options. A mortgage agent simply has more options (as they have access to more mortgage products) than a bank.
The more options you have, the better chance you have of getting a better mortgage. That’s why it’s better to get a mortgage through a mortgage broker than through a bank.
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